Too Tough a Nut: Russian Currency Recognized as the World's Most Successful, But There's a Caveat. Commentary by Semyon Novoprudsky

One of the most unexpected economic challenges for the Russian authorities, along with the boom in consumer demand amid sanctions, was the sudden strengthening of the ruble after Donald Trump came to power in the United States. The ruble is breaking world records for growth rates. However, while the United States recognizes the Russian currency as the most successful in the world, this is becoming a serious problem for the Russian economy, the columnist believes

In 2025, the ruble rose by more than 40% against the dollar and became the "most successful" currency in the world. Such data is provided by Bank of America. American experts explained this by the high key rate and overstocking of some segments of the Russian market, which reduced the need of exporters for foreign currency. The official rate of the Russian Central Bank as of June 10 is 79.15 rubles per dollar. Moreover, at one point during trading on June 9, the dollar futures fell below 74 rubles - to a minimum since 2023.

The ruble has been growing actively and almost non-stop against the American currency since November last year. At the end of November, the dollar rose to its maximum at the Central Bank rate - almost 109.6 rubles. The Russian budget - 2025 was drawn up based on the average annual exchange rate of the American currency of 96.5 rubles per dollar. And it is now below 80: almost 20% stronger than expected by Russian monetary authorities.

In an interview with the American television channel CNBC, international economist and analyst at the Wells Fargo banking company Brendan McKenna identified three reasons for the growth of the ruble: a high key rate over a long period of time, tightening controls on capital movements, and an attempt to achieve progress in the search for peace between Russia and Ukraine.

The first two factors obviously exist, but their influence on such a sharp strengthening of the ruble is not obvious. High rates in Russia since July 2023. Currency controls were tightened in April 2023. Since May 25, 2025, exporters included in the list approved by the presidential decree are required to credit at least 40% of foreign currency received under foreign trade contracts to their accounts in authorized banks. These companies are also required to sell on the domestic market at least 90% of foreign exchange earnings credited to accounts in Russian banks, but not less than 25% of the funds received in accordance with each export contract.

That is, these measures have been in effect for more than two years. And for a year and a half of that time, until late autumn 2024, when Donald Trump won the US presidential election, the ruble continued to weaken.

A more realistic reason for the ruble's strengthening appears to be the overstocking of the Russian market with consumer electronics, as well as passenger cars and trucks, the import of which grew rapidly in the second half of last year. Until the stocks are sold out, exporters have no reason to buy new batches, and, consequently, their need for currency decreases.

At the same time, although sales of currency by exporters on the Russian market are growing, they are not growing at the same rate as the ruble to dollar exchange rate. According to the Bank of Russia, from January to April, the volume of foreign currency sales by the largest Russian exporters amounted to 42.5 billion dollars. This is only 6% more than in the last four months of 2024. In addition, compared to last year, in the first months of 2025, demand for currency purchases from individuals fell.

Hopes for a Russian-Ukrainian settlement may have played a role in strengthening the Russian currency, but it is unlikely that the first five months of Trump's administration and especially the last weeks have convinced us of his ability to solve foreign policy problems.

Nevertheless, it was Trump's policy that played a significant role in strengthening the Russian currency. Tariff wars with the chaotic introduction of duties against hundreds of countries with constant rollbacks weakened the dollar against all world currencies, including the ruble. But even more importantly, under Trump, the US has sharply weakened control over compliance with anti-Russian sanctions. This makes it easier for Russian exporters to make payments and reduces their costs.

At the same time, it is difficult to call the long-term and strong strengthening of the ruble an unambiguous benefit for the Russian economy. On the one hand, it contributes to a certain slowdown in inflation. In April, when the Central Bank made a decision on the key rate, it was 10.34% in annual terms, and on June 6, when the regulator lowered the rate for the first time in three years, it was 9.66%. In addition, a strong ruble combined with high rates led to a record volume of savings in rubles among the population.

On the other hand, it is the strong ruble that is aggravating the problem of the state budget deficit in 2025 and has forced the government to radically revise its parameters. In particular, the planned budget deficit was increased more than threefold: from 0.5% of GDP to 1.7% of GDP, while the forecast for GDP growth itself remains unchanged.

In addition, a strong ruble becomes a negative factor for the dynamics of the Russian stock market. Usually, all other things being equal, the strengthening of the national currency plays against the growth of Russian stock indices.

In the context of continuing record growth in expenditure, the strengthening of the ruble reduces the budget's ruble income from foreign trade. At the same time, remembering previous experience, businesses and citizens also keep in mind the possibility of a sharp weakening of the ruble.

The strong unexpected growth of the ruble in the first half of 2025 shows that it is not so much the exchange rate itself that is important, but its predictability and stability. The unexpected consumer boom forced the Bank of Russia to keep the key rate high for a long time and cool the economy. An overly strong ruble may force monetary authorities to think about how to weaken it in order to combat the threatening growth of the budget deficit.